On Thursday, February WTI crude oil settled at $62.01, up $0.38 or +0.62% and March Brent crude oil ended the session at $68.07, up $0.23 or +0.34%. The spread between the benchmarks widened throughout the year, as Brent responded to the drawdown in supply from major world producers while USA output continued to grow.
US oil prices closed above $60 a barrel on the final trading day of the year, the first time since mid-2015, as the commodity ended 2017 with a 12 percent gain spurred by strong demand and declining global inventories.
U.S. West Texas Intermediate and worldwide benchmark Brent crude oil rose to their highest levels since early 2015 on Thursday, on concern that the escalation of unrest in Iran will eventually have an effect on supply and another decline in U.S. inventories as refining activity hit a 12-year high.
Oil hit its highest since May 2015 this week, supported by falling inventories, strong demand and high Opec compliance.
As if to herald what might really take place later this year, and again contrary to Sen's concerns, USA production rose to 9.78 million bpd in the latest week according to the Energy Information Administration - and this plus weaker refined products demand caused West Texas Intermediate on Friday to drop 57 cents to $62.21 and Brent to fall 45 cents to $67.62 per barrel.
"The draw was fairly in line with what we've seen in the latter half of 2017", said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
Traders said political tensions in Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), had pushed prices higher. United States commercial crude oil inventories decreased by 7.4 million barrels from the previous week, the EIA said in a weekly update.
"The protests don't put crude oil production at risk; from that perspective it is sort of a moot geopolitical factor", said Sarp Ozkan, analyst at Drillinginfo.com in Denver.
Earlier this year, oil prices slumped on concerns that rising crude production from Nigeria, Libya and elsewhere would undermine output cuts led by the Organization of the Petroleum Exporting Countries and Russian Federation.
However, while media is portraying the survey as evidence that OPEC members are strongly committed to reducing its output, a good numerous declines can be attributed to unforeseen problems and not any willingness to abide by the cartel's rules, case in point: Libya, whose output in December slipped by 30,000 barrels per day (bpd) due to a pipeline outage.
OPEC's cuts are helping reduce global inventories. Compliance has been high, as producers have chose to extend the supply pact until the end of 2018.
Yet given Iran's oil production has not been affected by the unrest and that USA output C-OUT-T-EIA is soon likely to break through 10 million barrels per day (bpd), a level so far reached only by Saudi Arabia and Russian Federation, doubts are emerging whether the bull run can last.